Accounting for Securities & Investments Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Which of the following investments are treated as held-to-maturity securities?

Question 2 2. The price paid for a bond less the value of any discount plus any premium is referred to as its _____.

Question 3 3. When does a company have to amortize a discount over the life of the bond?

Question 4 4. A premium paid for a bond results from _____.

Question 5 5.

A company purchases a 5-year bond with a face value of $12,000. Every year, the company records amortization in the amount of $500.


At what price did the company purchase the bond?

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Question 6 6. An alternative accounting method for held-to-maturity (HTF) and securities available for sale (ASF) allows companies to now record such securities at fair market value, with any changes in market value to be recorded in the profit or loss. Which answer choice BEST explains why this alternative method developed?

Question 7 7. Under which of the following circumstances must Company A use the equity method of accounting?

Question 8 8. Partial Foods Corporation reported $100,000 of available-for-sale (AFS) securities on its balance sheet. If the AFS securities currently have a fair value of $90,000, the company must make a fair value adjustment that credits _____ and debits other comprehensive income account.

Question 9 9. Which statement concerning securities available-for-sale (AFS) is MOST accurate?

Use this material to answer questions #10 through #12

Magnolia Enterprises purchased $350,000 worth of stock in Eagle Consulting, which resulted in it having a 35% ownership interest in Eagle Consulting.

Question 10 10. Magnolia Enterprises makes the following entry in its journal. What transaction is this entry recording?

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Use this material to answer questions #10 through #12

Magnolia Enterprises purchased $350,000 worth of stock in Eagle Consulting, which resulted in it having a 35% ownership interest in Eagle Consulting.

Question 11 11. Review Magnolia Enterprises's journal entry below. Which of the following statements is MOST accurate?

Use this material to answer questions #10 through #12

Magnolia Enterprises purchased $350,000 worth of stock in Eagle Consulting, which resulted in it having a 35% ownership interest in Eagle Consulting.

Question 12 12. According to Magnolia Enterprises's journal entry below, how much current year net income was reported by Eagle Consulting?

Question 13 13. Which of the following statements concerning consolidated financial statements is MOST accurate?

Question 14 14. Which statement concerning the recording of trading securities is MOST accurate?

Question 15 15. The intent of management, the type of investment, and the amount of the security owned are three factors that must be considered when _____.

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Question 16 16. In which of the following situations would Company A and Company B have to present consolidated financial statements?

Question 17 17. Which of the following are recorded at fair value and classified on the balance sheet as current assets?

Question 18 18. How should a company record its investments in trading securities on its financial statements?

Question 19 19. What is a treasury bill?

Question 20 20. An investor who needs a liquid asset should invest in _____.

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Question 21 21. What is a short-term investment?

Question 22 22. What are held-to-maturity securities?

Question 23 23. Which of the following securities would BEST be categorized as securities available-for-sale?

Question 24 24. How do available-for-sale (AFS) securities differ from held-to-maturity (HTM) securities?

Question 25 25. In which of the following situations would it be appropriate for Company X to use consolidation accounting?

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Question 26 26. What is a key feature of a short-term investment?

Question 27 27. Select the required accounting when your company owns over 50% of the outstanding voting shares of another company.

Question 28 28. Identify the correct accounting method for trading securities:

Question 29 29. Financial instruments that take their value from fluctuations in the value of something else are called:

Question 30 30. Identify the acceptable accounting method used to value HTM securities.

Accounting for Securities & Investments Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Accounting 202: Intermediate Accounting II  /  Business Courses
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